Condo Buyers Guide

Should I Buy a Condo?

As single family home prices have risen,
many consumers have been looking to condominiums as an alternative. First time
buyers like the lower prices, which makes entry into the real estate ownership
market easier. Seniors like the low maintenance aspect and the ability to be in
a community catering to their lifestyle. Others like the security advantages
that the building provides, especially for those who travel frequently.

Condo Concept

When you purchase a condominium, you
purchase and have title to your individual unit in a multi-unit property, and
share in the ownership of the land and other common property with all the other
unit owners. The type of common property
varies depending on the type of condominium - high rise or townhouse for
example - and would include hallways, elevators, heating system, parking
structures, landscaped areas, recreation areas etc.

A condominium is a specific form of ownership
and does not describe a type of building.

One of the great advantages to owning a
condominium is that in most cases, it is owner-occupied and owner run. Owners ensure their investment is maintained
and regard improvements as an investment which increases the value of their
individual unit.

Advantages and Disadvantages of Owning a Condo

If a winter holiday is part of your
lifestyle, you can leave with your mind at ease, without the worry of a
driveway to clear. In the summer the grass will be cut, you won't have any
exterior painting projects or fence repairs to look after.

Condo projects are now part of most
communities which means being able to stay in the same location where you were
a homeowner. Some condo projects are
more successful than others in terms of capital appreciation and length of time
to sell. Here are some of the advantages and disadvantages of condo ownership:

availability of
amenities such as swimming pool, tennis courts, hot tubs, saunas, whirlpools,
exercise facilities, health spas, sun decks, community rooms (the cost of which
may otherwise not be affordable)

cost is often
less than single family home due to efficient use of land and economies of
scale

very marketable

wide range of
prices depending on features, luxury and location

sense of
community due to permanence of residents and resulting social activity

developments
available geared to a specific lifestyle (restrictions on age, pets, children
etc.)

participation of
owners in operation of development including budgeting, decision making,
determination of rules and by-laws.

Disadvantages

some loss of
freedom may be experienced due to rules and by-laws e.g. type of pets allowed,
right to rent unit etc.

due to a larger
concentration of people you may experience problems with the "5 p's”, pets, parties, parking, personality and
people.

money is tied up
in equity

you may be paying
for some amenities you never use

boards of
directors vary in terms of skill and effectiveness

Common Element Fees

As a unit owner you will be responsible for
your share of expenses known as common element fees or common expenses. These
are set out in the condo declaration. It describes what expenses are to be
shared and in what proportion. This can be equal or unequal in cases where they
are based on the comparative size of the units.

The exterior and common area maintenance of
your condo is covered by your common element fee. The fees are usually paid
monthly in accordance with the budgeted expenses. Of course if your condo has
more amenities such as a swimming pool, on-site security personnel etc. your
fees will reflect the extra services.

Reserve Fund

Reserve or contingency funds are set up by
the condominium corporation to cover major or unexpected expenses. The
developer of a new condominium usually sets up a fund which is then turned over
to the condo corp. The fund becomes an asset of the corporation and each year
the unit owners decide on what the level should be. The individual owner does
not have any rights to the Reserve Fund.

Questions You Should Ask When Buying a Condo

Pricing

Is the unit
competitively priced with others currently on the market?

Have you taken
into account the amenities offered?

What is the
resale potential?

Have the units
appreciated?

Are other unit
owners in your financial bracket? If higher they may vote for services you can
not afford, if lower they may vote down changes you would like to see.

Condo Security

Security is a key
factor in choosing a condominium. The type of security will vary depending on
the type of condo you choose and special care must be taken to ensure it meets
your lifestyle requirements. What security features exist or are planned -
suite alarms, TV surveillance, controlled access? Here are the factors you
should consider or the questions you should get answers to.

Doors - Are they
solid wood or metal and equipped with dead-bolts and peepholes? Do patio doors
have effective locks?

Alarms - is there
wiring for home security alarms in every unit or suite?

If possible check
on the condo’s record for break-ins and vandalism by asking local authorities
or current residents.

Common Elements and Facilities

What amenities
are offered, what are the hours of use, is there a separate cost?

What is common
element fee and what is included? History of increases?

Are there any
exclusive use common elements (reserved for one or more unit holders)?

Parking and Storage Facilities

What is included
in the purchase? Some parking and storage may be separate and legally defined
units you own, others are common property allocated to the owner and subject to
reallocation by the Board, others are exclusive use elements designated for the
use of a unit, pursuant to provisions in the Declaration.

What parking/storage
is required and can you rent or buy additional spots/space?

Is there visitors
parking available?

Quality of Construction

What types of
materials were used in construction? Are the facilities in good condition? How
old is the building?

Find out if the
corporation has done a reserve fund study (estimate of the remaining life of
the various components, cost of replacement, and contributions needed to ensure
funds are available for anticipated repairs and replacements)

What is the
reputation of the developer?

Design and Layout

Size of suite and
rooms - adequate for furniture?

What exterior
changes can you make?

Can you add
solarium to balcony?

Owner Occupied vs. Tenants

How many units
are owner occupied vs. tenant occupied? Is there a maximum? Are there rental
policies and what are they?

Management/Appearance

Is project
managed by a professional company, resident manager or self-managed?

How well has the
building been maintained?

Does it fit your
personality/lifestyle?

Restrictions

Ask your RE/MAX agent for the complete set
of building rules and regulations. Are there any restrictions you require/don't
want - pets, children, age, number of people per suite, carrying on business in
a suite? Most condos have a long list of association rules and regulations by
which you'll have to agree to abide if you purchase in the building. These
rules may limit the number, type, and weight of pets; how many visitors you can
have at any one time; how often - and for how long - you can rent out your unit
(if at all); when and how you can reserve common facilities like the party
room; when you can have work done in your unit; and, what day you can move.

Expenses

What will be your
monthly operating cost?

Have there been
any special assessments in the last two years and are any planned?

Which utilities
are common and which are individually metered?

What are the
property taxes?

What insurance do
you need and what is covered by the corporation?

Ask to see the
past two years worth of condo board meeting minutes, as well as the last two
years' of budgets and the current year's projected budget. What are the owners
concerns?

Are there any
large-scale improvement projects planned? How much will they cost and how are
they to be funded?

Has there been a
review of the reserve fund to ensure it is adequate? Is the building fiscally
responsible? Are any fees/owners in arrears?

New Condominiums

Check the
reputation of the developer with people living in other projects they have done
or project you are looking at.

What is the cost
for set up of a reserve fund (one time up front fee)?

What are the
landscaping plans?

What warranties
are being offered - is the project covered by a New Home Warranty Program? What
are the terms of this warranty? Contact the organization offering the warranty
and find out exactly what is covered and what restrictions are involved. What
specific timelines builders must work to and what dispute resolution services
are offered? What clout does the warranty organization have with builders in
settling a dispute?

How many
elevators are there and how fast are they?

Are units wired
for cable TV and telephone at the developers cost?

Does the
corporation have a proposed operating budget? - If so, obtain a copy.